Published: December 2021

The CFPB must protect consumers from fraud in payment systems

Consumer Action was one of the 65 consumer, civil rights, faith, legal services and community groups that submitted comments to the Consumer Financial Protection Bureau (CFPB) in response to its inquiry into certain business practices of six large technology companies operating payments systems in the United States. The groups urged the CFPB to require person-to-person (P2P) payment providers to protect consumers from fraud and errors and to work with the Federal Reserve Board to ensure protections are in place before the Fed launches its new FedNow P2P service.

The existing person-to-person (P2P) payment systems of large technology companies and financial institutions simply are not safe for consumers to use. Scams often take the last dollar from those least able to afford it, and often target older adults, immigrants and communities of color. These communities, already denied or stripped of wealth through long-term and pervasive discriminatory business practices, can least afford to lose money to scams and errors.

The groups urged the CFPB to:

  • Make clear that the existing obligation under the Electronic Fund Transfer Act (EFTA) to investigate and resolve errors applies in the case of consumer errors in P2P systems. 
  • Ensure that consumers using P2P services have protection from scammers by using the Bureau’s EFTA rulemaking authority to define additional “errors.”
  • Work with the Federal Reserve Board to improve the proposed rules governing the FedNow system to add in protection against consumer errors and fraud.
  • Clarify the rules and protections when accounts are frozen.

With respect to data sharing issues, make clear the application of existing federal data governance laws, including the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act. 

Lead Organization

National Consumer Law Center (NCLC)

Other Organizations

A New Leaf, MesaCAN | Americans for Financial Reform Education Fund | California Reinvestment Coalition | Center for Economic Integrity | Center for LGBTQ Economic Advancement & Research (CLEAR) | Colorado PIRG | Community Action Human Resources Agency (CAHRA) | Congregation of Our Lady of Charity of the Good Shepherd, U.S. Provinces | Consumer Action | Consumer Federation of America | Consumer Reports | Consumers for Auto Reliability and Safety | Georgia Watch | Greater Boston Legal Services | Housing and Economic Rights Advocates | Illinois PIRG | Legal Action Chicago | Legal Aid Justice Center | Legal Services of New Jersey | Maryland Consumer Rights Coalition | Maryland PIRG | Missouri Faith Voices | NAACP | National Advocacy Center of the Sisters of the Good Shepherd | National Association of Consumer Advocates | National Community Action Partnership | National Community Action Partnership | National Consumers League | National Council on Independent Living | National Employment Law Project | National Fair Housing Alliance | New Jersey Appleseed Public Interest Law Center | Prof. Cathy Mansfield, Case Western Reserve University Law School | Prosperity Works | Public Citizen | Public Good Law Center | Public Justice Center | RAISE Texas | RESULTS | Texas Appleseed | Texas PIRG | Tzedek DC | U.S. PIRG | University of Iowa Law and Policy in Action Clinic | Virginia| Citizens Consumer Council | Virginia Organizing | Virginia Poverty Law Center | Washington PIRG | Wildfire: Igniting Community Action to End Poverty in Arizona | Woodstock Institute

More Information

Click here to read the comment letter in full.

For more information on the FedNow payment app, please visit NCLC’s website.


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